BOOKS.

SIR LOUIS MALLET'S " FREE EXCHANGE."* THOSE who had the pleasure and privilege of Sir Louis Mallet's friendship, will read these economical papers of his,—many of them, and those the most interesting, pub- lished for the first time,—with something more than in- tellectual interest. They will recall the almost spiritual atmosphere with which he invested subjects that are usually treated as mere items of the " dismal science ;" and they will recognise in Mr. Bernard Mallet's thoughtful and terse introduction, a perfectly accurate sketch of that sedate, and yet in no untrue sense, enthusiastic desire for the well-being of the mass of the people which constituted for him the very heart and substance of economical truth. The extract which Mr. Mallet takes as the motto for his father's papers is very happily chosen. It is from a private letter, but it expresses in the simplest and most effective manner the drift of the whole. "If, as an economist and Liberal," he wrote, "I did not believe that the free operation of natural economic laws tended to raise the condition of the masses, and to bring about a leas unequal distribution of wealth, I should take very little interest in political economy or in public affairs." And yet it may certainly be said, and truly said, by many of the devoted adherents of the late Mr. John Stuart Mill, that the main ideas and doctrines of these papers are diametrically opposed to Mr. Mill's most popular proposal for a more effective equalisation of wealth between the richer and the poorer classes of the community. That suggestion was, as we need hardly remind our readers, that what. Mr. Mill called "the unearned increment" in the value of land as the population and wealth of any country increases, is a legitimate object for specially heavy taxation,—indeed, for taxation so heavy that it might almost amount to its appropriation by the State on behalf of the community. It is quite true that Sir Louis Mallet held this doctrine of Mr. John Stuart Mill's to be heretical, and that he has attacked it in these papers with a keenness and force that seem to us perfectly convincing. But it is also true that Sir Louis Mallet did not believe that, if practically carried into effect in Mr. Mill's sense, it would have promoted " an improvement in the condition of the masses" at all, On the contrary, he held that it would work a great decline in the condition of the masses, and that if it tended to equalise the distribution of wealth, it would be only a temporary and almost momentary equalisation attained before the downward rush into much deeper and more hopeless misery. We will return to this subject presently. But first we must notice Sir Louis Mallet's general conception of Cobden's and Bastiat's economic prin- ciples, and their relation to what we may call the foreign and colonial policy which he advocated for England.

Cobden and Bastiat alike held what Sir Louis Mallet him- self regarded, at the time he published his essay on Cobden, as a legitimate consequence of really free exchange, namely, that " the men of rapine," as Bastiat called the aristocracy, would be dethroned, and that the modest and legitimate interests of the people would be substituted for the selfish and greedy ambitions in which the cliques of self-interested nobles and bureaucrats had embarked us. Sir Louis Mallet, like Cobden, did at one time anticipate a far more remarkable social and political revolution from the adoption of the policy of Free Exchange than any which it actually brought about. Indeed, he seems to have thought that no sooner would the people learn the advantages of free exchange in articles of cora-

* Free Exchange PapeTe cn Political and Economical Subjects, including Chapter, on the Law of Value and Unearned Increment. By the late Right Honourable Sir Louis Mallet, C.B. Edited by Bernard Mallet. London; Began Paul, Trench, TrUbter, and Co.

merce, than they would begin to value freedom of exchange in all kinds of intellectual and social services, and come to prize in the highest degree that frank and hearty mutual understanding with other nations which would end in making all the nations of the world dependent on each other, instead of disposed to boast of their independence. Here is Sir Lours Mallet's sketch of the drift of Cobden's policy in its higher aspects :—

" Cobden saw clearly that, unless our system of government, in, all its branches, were adapted to the altered conditions of our national existence, not only would our commercial reforms be shorn of their most valuable and complete results in the elevation of the masses of the people, but that we should also incur the risk of very serious dangers. Nothing is so fatal to success in the life of individuals or of nations as a confusion of principles in action. Under the system of monopoly, it was logical enough to keep alive the chimaera of the balance of power, to seek, in foreign alliances and artificial combinations of force, the security which we could not hope to derive from legitimate and natural causes. In the government of our foreign possessions, it was logical to annex provinces and extend our empire, and by the display of force and the arts of diplomacy to coerce and despoil; and for both these purposes, it was necessary to maintain costly and imposing forces by sea and land, and to cast on the people the burden of a pro- portionate taxation. By means such as these we might have prolonged, for two or three generations, a false and hollow supremacy, and warded off for a while the inevitable doom which awaits all false principles. But with a policy of free exchange, those things are not only inconsistent, they are dangerous. They are inconsistent, because a policy of Free-trade rests on the prin- ciple that the interests of all nations lie in union and not in opposition; that co-operation and not competition, international in- terdependence and not national independence, are the highest end and object of civilisation, and that, therefore, peace, and not war, is the natural and normal condition of civilised communities in their relation to each other. They are dangerous, because a country which is unable to feed its own population without its foreign trade, and of whose prosperity, and even existence, peace is thus a necessary condition, cannot afford, without tremendous risks, to encounter the hazards of war with powerful enemies. If such a country trusts to the law of force, by that law will it be judged, and the result must be crushing failure, disaster, and ultimate defeat. There were those who clearly foresaw and appre- hended this, and deprecated the repeal of the Corn Law accordingly, but who did not perceive that the alternative was an inadequate. supply of food for a third of our population."

Unfortunately, Cobden did not foresee what Sir Louis Mallet lived to realise, that the grant of political freedom to a people by no means implies that that people will adopt this large and sober and modest view of the interdependence. of nations upon each other. He lived to regret that in.

granting free self-government to our Colonies, we had not refused to grant them the free right to protect their pro- ducts against the competition of the Mother-country and. the rest of the world,—in fact, that we had not insisted on.

making their commerce free against their will, that we had not manacled their political in order to ensure their economical freedom. Bastiat's belief that free exchange would grow till nations had thrown off all their mutual jealousies and fears, and the planet had become a moral and economical unit, was bitterly disappointed, and it is evident that Sir Louis Mallet later in life sympathised as deeply in the late Sir Henry Maine's disillusion as to the economical and moral wisdom of democracy, as he had earlier in life in Mr. Cobden's hope that democracies would show themselves to be free from the selfish passions of castes, and cliques, and oligarchies. In matter of fact, a democracy is as certain to fall into blind and ignorant prejudices of its own, as any oligarchy is certain to fall into a selfish and grasping system of artificial policy. But even apart from the errors of democracy, which are often as serious, though not the

same in kind, as the errors of oligarchies, we believe that both Mr. Cobden and Sir Louis Mallet were a little too. much disposed to assume that the energy of a nation is a

constant quantity, and that what it• does not squander abroad it will use at home. That is certainly not true of

Churches. We find that the Churches which deprecate foreign missions in order that their home missions may be more efficient, usually succeed only in securing that reluctance to incur risk and to give freely, which suffocates the vitality of the Church itself. And something of the same kind is true of political energy. We heartily agree with Sir Louis Mallet in deprecating that hare-brained Jingo spirit which never truly realises the responsibility of a " spirited foreign policy." But we do doubt whether strict abstention from all risk in foreign policy, has any tendency to foster sober internal reform in such a nation as ours, We go a long way with Sir Louis Mallet's dislike of the recklessness and boastful- ness to which Englishmen are always liable, and we wholly

admire the motive of his view. But we hold that he did not make enough allowance for the elasticity and variety of English character, and that he mistook if he thought that we could ever be the stronger and soberer at home for drawing out of all large responsibilities abroad.

On the main subject of the new essays we do not doubt for a moment that Sir Louis Mallet has made out his case,—we mean as to the doctrine that the principle of private property is just as important for society when it is applied to natural monopolies such as land, as when it is applied to what are called the products of labour. In fact, there are very few products of labour which do not share more or less in the "unearned increment" arising from natural monopo- lies. When a man gets higher wages because he is a specially strong and industrious labourer, part of those wages is the " unearned increment" due to the rent on special faculties both physical and mental. Every ingenious mechanic, every successful novelist, every successful poet, or teacher, or organiser of labour, receives what is properly speaking a rent on the possession of peculiar natural advan- tages, just as much as a landlord receives rent on that portion of his land which is of a natural fertility above the average. Nay, as Sir Louis Mallet puts it with admirable subtlety on page 291, the rise of wages which takes place in a rural district after a great migration of labour to London, is nothing but an " unearned increment," in no way due to the quality of the labour that remains behind, but solely to the scarcity which has been caused by the departure of those who have gone away. If all "unearned increments" are

to be legitimate subjects for seizure by the community at large, the community would be entitled to impose a special tax on labour in every rising labour market, and to appropriate to the collective society the increase due not to the exertions of the special labourers, but solely to the increased value given to their services by the migration of their fellows. The whole tenor of Sir Louis Mallet's argument, that the principle of private property is just as important for the regulation of the value of natural monopolies as it is for the regulation of the value of the products of average labour, is quite im- pregnable, and we need not say that it is set forth in a very masterly and exhaustive fashion. As he justly says, all private property is essentially monopoly. And unless monopo- lies are allowed to become private property, it will be found enormously difficult, and generally impossible, so to limit the .demand for them as to prevent their being utterly wasted in the scramble which the community will make to divide them amongst its various members. Nowhere does Sir Louis Mallet put the real issue between the Socialist theory which wonld make the land a common possession for the whole community, and the true economical theory which would treat land like all -other natural advantages as private property, than in the

following terse and admirable note, which seems to us to con- tain the whole kernel of the controversy :—

" I suppose that, in discussing Political Economy, no one would deny that the interests of society require the largest possible production of wealth ; but I greatly doubt whether many would not be found who would dispute the proposition that net produce is the object of all civilisation, and yet this I conceive to be the keynote of the Free-trade doctrine. 'Man, they say, not wealth, should be the first object of your regard' (Toynbee). Better, if so, a thousand men earning a bare subsistence with no leisure, no culture, no refinement, than five hundred of whom one hundred possessed all these advantages. I confess that I cannot argue on this foundation. That mere numbers, the more existence of a certain number of human beings, with nothing to give dignity or interest to life, should be an object of paramount concern, seems to me so absurd that I cannot suppose that it is seriously and consciously entertained ; but I believe that unconsciously there is a great confusion of thought in connection with this question of gross and net produce."

And Sir Louis Mallet evidently held that in taking this ground, he took it not on behalf of the one hundred who enjoyed the greater leisure and culture, but on behalf of the whole community, which is not only all the happier, but all the more alive, all the better, for having these distinctions and ihopes and prospects to stimulate it to exertion, than it would be at the dead level of a bare subsistence. The proof that this dead level would soon be reached on the Socialist view, is elaborated in these essays with the greatest vigour and effective- ness. We hold, indeed, that some of the statements in which Sir Louis Mallet denies that cost of production is even a useful measure or criterion of value, are too sweeping and hasty; for it seems to us that however true it may be that the value of an article is not determined by the cost of producing it, since corn produced in specially fertile land is certainly much more valuable,—will sell for much more,—than the actual cost of pro- ducing it, yet the cost of producing the same corn on the least fertile land which it pays to cultivate, does certainly give a very practical and useful measure of the value of all corn of the same quality, and a measure with which it would be impossible to dispense. But these occasionally rather ill- considered statements are, we think, more due to the condition in which the author necessarily left the essays, than to any misapprehension of the subject.

We cannot prize too highly, however, the masterly ex- posure of the doctrine that the State has a right to appro- priate the "unearned increment" of value, which this book contains. Sir Louis Mallet was not only one of the most learned economists of his day, but one of the wisest of them, for he filled his economical teaching with that spirit of moral and spiritual wisdom which has too often been wanting amongst English economists.